Climate action in California has repercussions around the globe–the state has the fifth-largest economy in the world, and is forecast to overtake Ge

California SB 253 and SB 261: a guide for companies

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2024-11-01 12:30:06

Climate action in California has repercussions around the globe–the state has the fifth-largest economy in the world, and is forecast to overtake Germany and become the fourth sometime this year. That’s why all eyes are on the new climate disclosure law that will soon apply to thousands of US companies doing business in the state.

The new rule compels US companies doing business in California to disclose their scope 1, 2, and 3 greenhouse gas emissions and/or climate-related financial risk information. The goal—improving corporate transparency and standardizing corporate disclosures regarding carbon emissions; aligning public investments with climate goals; and raising the bar on corporate action to address the climate crisis.

Though the rule focuses on US companies that do business in the state, it is part of a global movement towards legislation that requires robust climate reporting from companies, including the SEC’s climate disclosure rule in the US, and the Corporate Sustainability Reporting Directive in Europe.

A note on terminology—the CCDAA has been known by several different acronyms in the course of being agreed and amended, and used to be two separate laws that have now merged into one. The final bill that legislated for the rules is known as SB 219, and you may sometimes see reference to the original bills SB 253 and SB 261.